Little is known about the effects of the most recent welfare reform initiatives—which include work mandates, time limits, and enhanced earnings disregards—on children’s outcomes. This is partly because the ways in which maternal employment and income affect children more generally are not well understood. This article describes the effects on child development of the Minnesota Family Investment Program (MFIP), a welfare program that began prior to 1996 federal welfare reform legislation. The present study utilized MFIP’s unique, three-group research design to untangle the effects of different components of the program, and, in turn, discover how each component’s effects on parents’ income or employment affected children’s development. This study’s findings showed that MFIP increased employment rates and decreased poverty and, according to reports from mothers, children were less likely to exhibit problem behaviors and more likely to perform better and be more highly engaged in school. These findings, based on a total of 879 participants, bolster the long-standing literature that has associated poverty with worse outcomes for children by confirming, in a rigorous experiment, that incremental increases in income for working poor parents bring benefits to children.